Mail Bag Question – 57 Years Old & Unemployed. Now What?
By Neal@Wealth Pilgrim on May 18, 2009 in How To Spend Less Money, Money and Marriage
Last week, I asked you what your greatest financial challenge was.
I received a number of responses & I plan on answering each one. It may take some time, but I will answer you.
Here's a question I got from Jerry and now I'm counting on all the Wealth Pilgrims out there (that means you) to help him out. Here's Jerry's email:
My biggest financial challenge:
I am employed and will be losing a job during 2009; I am an older employee and I believe I will experience age discrimination while looking for a new job.
My wife does not work outside the home; we have a daughter that is in college.
I did not save for college and retirement; my current employer has a qualified saving plan (401(k)) and I have to make sure I provide for college and try to save for retirement and health care premiums.
Tough situation. How would you advise Jerry?
My approach would be to address each issue independently. Let's deal with the employment issue first.
Jerry's job is winding down and he expects difficulties finding new work.
I used poetic license when I wrote that Jerry is 57, but regardless, he may indeed encounter age discrimination when he goes looking for new work. If that does happen, I don't think it would be the best use of his time or money to fight it. It's probably not a battle he can win. Having said that, there are a ton of things he can do:
a. Start looking for new work now.
Your current employer may not sufficiently value your experience but you will find another employer who does. Network. Talk to friends. Scan Craig's List. You should also talk to HR at your current job - they may be able to help.
Just because jobs are hard to come by doesn't mean you won't find work. Remember, all you need is one. Each interview you go on now gets you closer to that "yes". And don't assume that the new job will be worse than your current position. You never know what's out there. Maintain a positive attitude.
b. Hire yourself out as a consultant and start now.
List your services at Elance.com and Guru.com. These are great sites that allow independent contractors to bid on all kinds of work. If your current contract forbids that, talk to your employer and see if they will make an exception. It doesn't hurt to ask. They might feel terrible about phasing your job out and if so, you can use my favorite secret weapon on them - guilt.
I started my career in a bank a few decades ago. After a few years, I decided to set out on my own. About a year before I opened my own shop, I started using a marketing program because I wanted to make sure that I could find new clients after I left the bank.
While I was employed at the bank, I introduced these new clients to the bank's financial services of course. But once I knew the marketing program worked, I left the bank.
Use the time you have now to build up a consulting business in your field of expertise. When the day comes that your job is phased out, you might find that you are making more money than ever.
c. Consider starting a new business but be careful.
I strongly recommend that people refrain from opening businesses in which they have no experience. And even if you do have the experience, you might have the skills you need to be an excellent employee but that doesn't mean you have the skills to be an excellent business manager.
I love small business and small business owners. I have nothing but respect for these people. But I'd prefer someone start a business slowly and build it up. Don't sink too much money into something before you see a positive cash flow. More on this subject tomorrow.
If you insist on going into business and you don't want to go the consulting route, consider buying a franchise. Make sure you do your homework and only get involved with a franchise that is growing and has demand. Talk to as many existing franchise owners as you can. Talk to franchise owners who have closed their stores. Find out why they closed.
d. If possible, Jerry's wife should consider working too.
Health permitting, this could be great for both Jerry and his wife. Especially since they don't seem to have small children at home anymore.
A few years ago my wife went to work as a teacher's aid. The only job available was one working with kids with autism. My wife didn't target this profession but that's what came her way.
In short order, she fell in love with the job. She finds it very rewarding and she's working with great kids too. Oh...and did I mention....she gets paid? She also gets medical insurance and other benefits. You better believe that has really come in handy - especially these days.
Over the course of the next few days, I'm going to provide more input for Jerry on the other issues he's raised.
These are four ideas Jerry can use to increase his income. Can you think of anything else Jerry should consider?
Do you think these are good ideas or are these suggestions unrealistic? What did I miss?
photo by JC Westbrook, Flikr
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15 Comment(s)
By Patrick on May 19, 2009 | Reply
Excellent suggestions, Neal. I think it is easy to fall into a pattern and accept the status quo, especially if the status quo is not broken. Luckily your reader has the advantage of knowing there is going to be a change and has the opportunity to plan for it.
I think all the suggestions are excellent, particularly asking the spouse to work if she is able. My Mother was a stay at home mom when we were growing up, but she went back to work when we were old enough to fend for ourselves after school for a couple hours. She loved the new challenges she got from working and the added income was a big help for our family. My parents got a late start on retirement savings, but once my Mom went back to work they started saving a lot more money for retirement.
One other suggestion for your reader is to consider letting your child take out some student loans or work part time to help defray the costs of his/her education. I know you want to help your child, which is commendable. But don’t do it at the expense of your retirement. Your child can borrow his/her way through school, but you can’t borrow your way through retirement. Good luck!
By Neal Frankle on May 19, 2009 | Reply
Patrick,
I agree completely. I am no fan of ruining your retirement for your child’s college.
By chuck wintner on May 20, 2009 | Reply
My very strong advice is for everyone to stay away from Sallie Mae. I went back to school late in life, and I will never be sble to pay off this horrible loan. Credit cards are better deals than Sallie Mae. Look for the next huge financial crunch (and bailout) to come when the vast majority of people who took out these loans default on them.
Sallie Mae went to bed with Freddie Mac, and as a result, there are a lot of illegitimate loans out there. Nothing wrong with community college for 2 years. Then your child transfers and goes to a “real” college for two. The diploma will only say where he graduated from. I believe whole-heartedly in WealthPilgrim’s advice to work, and pay as you go.
chuck wintner
By Christine on May 24, 2009 | Reply
It’s always possible to borrow for college, but not at all possible for retirement. Plus, colleges offer grants, scholarships, fellowships, student jobs and work study to supplement/replace this need. Your daughter’s college needs have to come second to your retirement needs.
I recommend your wife download ms office (free for 60 days) and get an exercise book from the library to study and work her way through it. She can do the same with ms access. Target and Best Buy sell typing tutorial programs for $10 each. Spend a few minutes a day working on speed and accuracy. Look at the United Way volunteer requests online and pick an office job. Stay 6 months to provide a reference, then start looking for a job. Don’t forget the temp agencies, something could turn into a permanent job. They do thoroughly test your computer/typing skills so be prepared. If she is younger than you, she can probably establish enough social security credits to earn retirement benefits by age 67. Try sticking with this job, get cross trained and promoted with raises. Check out the local govt jobs for a very valuable pension, these are usually vested after 10 years.
As for you, start working on the resume now. See if there are any networking organizations in your field online (meetup.com sometimes). When the inevitable happens, spend that severance slowly and file for unemployment immediately. It has been extended to 12 months so this will be helpful. Do not even apply for a survival job unless there just aren’t any jobs in your area or no one else is calling. Sometimes if you try to run the unemployment to the end, you are caught without a safety net.
In the mean time, downsize to a small house, 2 used cars, no vacation home, boat, rv, etc. “The Complete Tightwad Gazette” is very helpful in changing your lifestyle. It’s a must read for both of you. Stretcher.com, frugalliving.about.com, frugalvillage.com are all very inspiring. Get caught up in the frugal lifestyle, it’s creative and challenging. No more eating out, movies, happy hour, manicures, pedicures, spa treatments, massages, golfing, sporting events, cultural events. Take all the money and start an emergency fund.
Once you are both working, read “Total Money Makeover” for a roadmap to a debt free life. We can both only hope that social security is saveable. It’s supposed to go belly up by 2016.
With a paid off house, car, no credit cards, etc, you both could have a very nice life on social security benefits alone after the age of 67 with medicare and a supplement policy. If you are living in a high cost of living area, now is a good time to consider a change.
By 7 steps to be successful company expansion on Jun 6, 2009 | Reply
I usually do not comment on blog posts but I found this quite interesting, so here goes. Thanks!
By Small Business Forum on Jun 11, 2009 | Reply
Your blog has some great information for small businesses. Thanks for taking the time to share your knowledge!
Neal Reply:
June 11th, 2009 at 8:24 pm
Thanks for those kind words!
By Meriel on Jun 22, 2009 | Reply
Thank you for your help! We all know how important a credit check is for lower loans.
By Drucheap car insurance on Jun 23, 2009 | Reply
Very well written post however, I would recommend that you turn the No Follow off in your comment section.
Keep up the good work.
By mweeza on Jun 23, 2009 | Reply
Very good blog, I’m on to discover some more cool articles here!
By lamborghini motor on Sep 12, 2009 | Reply
Thanks for wonderful post. Please direct me to a link with more information. thankya.
By Neal on Sep 14, 2009 | Reply
Lamborghini
I’d start with:
http://outofyourrut.com/blog/2009/09/14/you-have-the-ability-and-talent-to-make-your-dreams-come-true/
This site is perfect for you.
By modernwarfare on Oct 22, 2009 | Reply
Well, it seems that you are expert in your field!
By Recruiter Bill on Nov 9, 2009 | Reply
Try a Staffing Agency, Contract or Temporary work is a good way to get into a job. The Client is mainly interested in having somebody come in and hit the ground running, baby boomers are know for a good work ethic and no nonsense approach to the workday.
By Cindy K on Nov 30, 2009 | Reply
Perhaps the wife could do direct sales with a reputable direct sales company. There are several. If she is into natural products that give unusually good results, she can contact me for training at dryskinnomore@aol.com
By mild autism signs symptoms checklist on Jan 25, 2010 | Reply
Right on !! Damn I’m getting addicted to your blog